ASIC Disqualifies 3 SMSF Auditors and imposes conditions on 14

This email is not to scare you - but to alert you that ATO had referred 17 SMSF Auditors (other than Mr Tran) to ASIC after checking their Auditing working papers. ATO can refer to ASIC about the SMSF auditors poor auditing standard under section 128P of the SIS Act. ASIC disqualified 3 and put conditions on the other 14 auditors - below is the list.

The most common breaches which ATO found

Below is a list of breaches which the ATO found whilst checking SMSF auditing working papers of these 16 SMSF Auditors:

- failing to obtain sufficient appropriate audit evidence in the audit of an SMSF in relation to the property and investments in unlisted trusts;

- compliance with limited recourse borrowing arrangements;

- transactions with related parties;

- lack of understanding of independence requirements;

- not complying with CPD requirements;

- failing to provide documentation to the ATO within a reasonable timeframe;

- failing to obtain signed financial statements;

- deficiencies in audit documentation.

How to Make sure that you do not make the list next time

Clearly from the above list of breaches - you have to keep up your CPD hours and conduct a high quality audit & to do both:

• Renew your membership of SMSF Auditors Association of Australia Ltd (SMSF AAA) - www.smsfaaa.com.au - please note that you can obtain 20 hours of Superannuation related CPD every year for membership fee of $240 per year - and if you do not Join / renew by 31st July 2019 - you will miss two hours CPD in past webinars section of the website.

• Use an Audit checklist which helps you conduct a high quality audit. You can try for 5 funds free audit if you register with www.onlinesmsfaudit.com.au - the cost of using the online checklist is as low as $7 per fund. Full list of features is attached here.

To learn how to use this software - attend our one day event - 6 CPD Hrs - Click here for more information

ASIC disqualified the following 3 people from being SMSF auditors:

1. Tram Tran: for not being a fit and proper person.

2. Kelvin Wright: for failing to obtain sufficient appropriate audit evidence in the audit of an SMSF in relation to the property and investments in unlisted trusts being reported at market value, borrowings including compliance with limited recourse borrowing arrangements, the purchase of properties, lease agreements, transactions with related parties, liabilities and expenses, and failing to comply with CPD requirements.

3. Geoffrey Wood: for signing an inappropriate audit report, failing to provide audit files to the Australian Taxation Office (ATO) on a timely basis despite multiple requests, failing to lodge his annual statement within the required time frame and otherwise not being a fit and proper person.

ASIC imposed conditions on the following 14 SMSF auditors:

1. Stephen Bray: for deficiencies in auditing fund assets and loans, a lack of understanding of independence requirements and failing to comply with CPD requirements.

2. Ross Casperson:  for deficiencies in auditing fund investments and borrowings, failing to obtain signed financial statements and not complying with CPD requirements.

3. Dharambir Ghangas: for deficiencies in auditing fund investment properties, other assets and motor vehicle expenses.

4. Gerald Adams: for auditor independence breaches and deficiencies in auditing loans and fund assets.

5. Rohan Dyson: for auditor independence breaches.

6. David John Simpson: for auditor independence breaches, deficiencies in auditing fund borrowings and assets, 

7. Geoffrey Sexton:  for auditor independence breaches and deficiencies in auditing fund borrowings, assets and income.

8. Sandra Koschel: for auditor independence breaches.

9. John McCann: for auditor independence breaches and deficiencies in auditing fund borrowings, assets, income and expenditure.

10. Leo Sheppet:  for auditor independence breaches and deficiencies in auditing fund borrowings and assets.

11. Rodney Grosvenor: for auditor independence breaches.

12. Dennis Kronheim: for auditor independence breaches, deficiencies in auditing fund assets and borrowings, and not complying with CPD requirements.

13. Michael Lane: for deficiencies in auditing income and audit documentation.

14. Thomas Swanton: for deficiencies in auditing fund assets, member benefits and related party transactions.

Various conditions imposed across these auditors were:

Below are the conditions imposed by ASIC:

Peer reviews: Having three to five audits, for one or two financial years, reviewed by an independent SMSF auditor for compliance with auditing standards.

Restricted audits: Being restricted from conducting any audits in independence threat situations as illustrated in specific independence guidance regardless of any safeguards.

Independence assessments: Performing and reporting on specific independence threat assessments for all clients.

Professional associations: Providing a copy of the conditions to their professional association.

Education: Completing specific courses of study, including in ethics and audit.

Annual declarations: Providing ASIC with annual declarations about specific independence situations.

Exam: Sitting and passing the SMSF auditor competency exam.

Proof of CPD: Providing proof of compliance CPD requirements annually for three years.

Responding to requests: Respond to written requests by the ATO or ASIC within the times specified.